Recently self employed remortgage wuestions

LyndseyFHTFH

Hi Folks,

Myself and OH became predominantly self employed in Jan 2019 and our 5 year fix ends in December 2020. We know it is going to be tricky to remortgage so wanted to make a few very early enquiries of people who are more knowledgeable than we are!

Our mortgage is currently with Nationwide and we have an outstanding balance of just over £112,000. When we took the mortgage out we only had a small deposit (5%), so the fix is at over 5% APR. As we were planning to extensively renovate the property, we wanted the stability of a 5 year fix and used a mortgage broker to get us the deal.

So mortgage when we took it out was:
£126,000 over 30 years at £641 per month

In Jan, my OH gave up his full time role and became fully self employed. I am still working PAYE 1 day a week, but self employed the other 4, as of Jan, but do do overtime and get bonus payments occasionally because of the nature of the job. I estimate that this will give me under £15k PAYE income.

In terms of self employed income, we aren't entirely sure what we're earning as it's been so recent. I'd estimate somewhere in the region of £30k each though.

In terms of other finances, we have a loan in my name which currently stands at just over £7,000 at 3.2%, 25 months remaining. (We're working on saving enough to pay this off next year)

Both have credit cards, which we use for day to day/business spending but by and large pay off in full each month.

Never missed a payment, no issues with affordability of debts etc.

In an ideal world, come next December we'd like a new fix (not necessarily for 5 years!), which revalues the house because of the renovations and to reduce the mortgage term to 20 years. Happy to stay with Nationwide if it makes like easier. Is that likely to be pure fantasy without 3 years of books?

Is there anything we can be doing to become even remotely attractive?? Happy to provide more info if i've missed anything useful!

Penelopa.Pitstop

In worst case scenario, you can switch product to free tracker and when you have enough accounts or SA302s remortgage properly to shorter period or different bank.

If you switch product with Nationwide and keep existing period, you can overpay every month and it will have the same effect as shortening mortgage period.

ACG

Nationwide will probably need to send a surveyor out (and will charge) if you want to take advantage of renovations rather than just normal increases (or decreases) in the local area.

With basically 2 years trading and 1 years accounts (April 2019-March 2020) I would expect there to be lenders for you at normal rates. If you are below 75% LTV you will probably have a handful of lenders, if you are above then maybe 2-3.

Get your broker involved and I am fairly confident you can normal rates using one years accounts and taking advantage of the renovations when the time comes.

LyndseyFHTFH

Thanks both!

So, it would be in our interest to submit our accounts for April 19-April '20 pretty pronto rather than close to the deadline so that we have the filing for our application?

We aren't super concerned about falling onto their tracker rate as we'll be paying less on that that on our current fix, so it won't end the world, but i like the stability of a fix. Any discrepancy between our previous and new rate (whether that's tracker or a new fix) will go into an overpayment, along with the money we're currently using to pay the loan once that's paid off. I think those two figures should give us an overpayment of about £400 a month all being well.

We're going to try and complete all renovations by next Summer so we can get the best valuation on the house. Nationwide's calculator based on % puts out house value at almost £150k, which isn't bad and will sneak us in under the 75% threshold.

Realistically, I think by next Summer we'd probably get an agent's valuation of at least £160k, but potentially closer to £180k, looking at what similar properties have been marketed for on the street we are on the corner of. We actually live opposite an estate agent/mortgage broker but we're never home when they're open!

dimbo61

If you have any spare money overpay the mortgage every month

Discountdave

I was with Coventry BS and had a 5 year fixed coming to an end. Was apprehensive about remortgaging as I was in a very similar situation. I ended up letting it run onto variable for a couple of months (just to delay having to sort it out - I know not the greatest of ideas) and then looked into it - It was extremely simple, there were no credit checks or financial information required. It was all done in an hour after a quick chat about affordability on the phone and I fixed a 10 year deal (with a 5 year get out if needed) at a great rate.